THE COURTS SHOULD NOT MAKE PEREMPTORY ORDERS LIGHTLY: PORTER CAPITAL CORPORATION –V- ZULFIKAR MASTERS CONSIDERED

The fact that relief from sanctions is now more difficult emphasises the principle that courts should not make peremptory orders lightly. The case of Porter Capital –v- Zulfikar (19/3/1014) only on Lawtel at present) is a case to point.

THE FACTS OF PORTER: APPLICATION FOR PEREMPTORY ORDER IF INTERIM PAYMENT NOT MADE

After a contested hearing the claimant made an application for an interim payment pending the taking of an account. The claimant also sought and an order that, in the event of a default in payment, it should be allowed to enter judgment for the whole amount claimed or, alternatively, the defendant should be debarred from defending the proceedings.

THE DECISION: MITCHELL SHOULD MAKE THE COURT THINK CAREFULLY BEING MAKING ANY PEREMPTORY ORDER

Deputy High Court Judge Strauss QC granted the Claimant an interim payment but refused to make a peremptory order. He made the following observations in relation to approach of the courts following Mitchell:-

“4. In my view given the more stringent regime for obtaining relief from sanctions imposed by the amended provisions of CPR 3.9 (see Mitchell v News Group Newspapers Ltd 2013 EWCA Civ 1537), it is appropriate that the court should adopt a cautious approach to the making of orders with sanctions attached, unless of course the sanction is built into the rule, as in the case of the requirement for a costs budget which was in issue in Mitchell.

5. Since the sanctioned party may find it difficult to obtain relief from anything other than a trivial breach, the court should consider in advance whether the sanction will be a proportionate response to a breach of the order in all foreseeable circumstances. In particular, where the order requires the payment of money, as opposed to compliance with a procedural direction, a breach may not be deliberate or in any sense blameworthy, but due just to a lack of funds.”

A PEREMPTORY ORDER WAS INAPPROPRIATE

He then went on to consider whether it would be appropriate to make the order.

“6. The order sought in this case is, in either form, wholly inappropriate for the following reasons:-

(a) there has been no prior default justifying a stringent order or any order other than the usual one;

(b) it is impossible to say in advance whether a default would be deliberate or otherwise blameworthy;

(c) the effect of the main order sought would be to give Porter judgment, automatically, for about 3 times the amount that I have found to be a reasonable proportion of its likely entitlement;

(d) the effect of the alternative order sought would probably be the same, as the court conducting the assessment would have no means, without Mr. Masters’ expert’s evidence, of finding any errors or excessive claims; and

(e) generally, the order sought, in either form, would be potentially unfair on a defendant’s other creditors if the reason for the default were insolvency since, in the event of bankruptcy, it might well give the claimant a greater share of his assets than its proper entitlement.”

THERE IS NOT A “ONE STRIKE AND YOU’RE OUT” REGIME

He concluded:

“8. While the courts now adopt a more rigorous approach to compliance with their orders than formerly, this is still some distance from the ‘one strike and you’re out’ regime implied by the order sought in this case, which even in its milder form would in my view be inconsistent with access to justice principles and probably with ECHR article 6”

THE COURTS SHOULD BE SLOW TO MAKE PEREMPTORY ORDERS ON A EX PARTE BASIS

The circumstances of the making of peremptory order on an a without notice application when the Court only heard one side of the argument was specifically deprecated by the Court of Appeal in Ryder Plc -v- Dominic James Beever [2012] EWCA Civ 1737. This was a consideration of the discretion being exercised under the old CPR 3.9, Smith L.J. observed that unless orders should rarely be made on an ex parte basis. Smith L.J. observed:-

“If, contrary to the view I have expressed, a court regards it desirable to make an ‘unless’ order without the issue ofan application, the court should surely be slow to make such an order without giving the party affected the opportunity to be heard, as happened here. In short, I deprecate the practice followed here. The CPR are intended to make solicitors comply withorders or to face the consequences with their eyes open. They are not intended to create traps for the unwary or slightly incompetent.”

There is nothing in the new CPR 3.9, Mitchell, or any of the subsequent cases that indicates that this principle has been changed.

KEY POINTS: PEREMPTORY ORDERS SHOULD NOT BE GRANTED READILY

Although the courts are now applying a more rigorous approach to compliance with court orders and rules this does not necessarily mean that peremptory orders will be granted more readily.

Stringent orders are unlikely to be granted when there has been no prior default.

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[…] question in a case called Porter Capital –v- Zulfikar, reported by Litigation Futures here and by Gordon Exall here. The judge drew a careful distinction between sanctions required by the rules and those which lay […]